5 steps to $5,000 in monthly recurring revenue

Work smarter, better, and faster with weekly tips and how-tos.

It’s been 6 months since we launched the first version of Statuspage. Looking back on this early phase of our company, we thought it would be helpful to talk about how we got to our first $5,000 in monthly recurring revenue. As we continue to grow and hopefully reach $25,000, $50,000 and $100,000 in monthly recurring revenue, we’ll follow up with new blog posts detailing how getting to each milestone is different than the one before.

Let’s get to it.

Step 0: Find a problem worth solving

As web developers, we consistently rely on a multitude of web services to build our applications. While we do take the time to build exception handling into our apps, often times our relationships with our outside providers are at best opaque and we are left in the dark when it comes to outages and server incidents. Without a way to peer into their systems or get proactively notified when a service is having issues, we’re forced to context switch, contact support, and wait for a response when all we really want to be doing is building our product.

Work smarter, better, and faster with weekly tips and how-tos.

Thinking through our problem a bit more, we had a hunch that all other developers feel the same way. We also had a hunch that companies strive to be transparent, but fail due to lack of time and resources. So, instead of just complaining, we decided to build a product to solve our own problem.

The problem

Companies don’t want to spend the time and money to build and maintain status pages outside of their infrastructures, instead, preferring to work on their core products. As web and mobile applications become increasingly reliant on other services, understanding the status of all of your vendors and integration partners is key.

The hypothesis

If we can make it as easy as possible to get setup with a beautiful status page in under 30 minutes, we’ll bridge the communication gap between software companies and their customers, leading to a transparent web and happy developers.

Users can display the status of the separate components of their infrastructure

End-users (our user’s customers) can get email and SMS alerts of updates

Redundant infrastructure so that we’re not down if our users are

Key takeaways

In our minds, there is no better way to build a product that people want than to be the customer you plan to sell to. From Day 1, you’re already a leg up by thoroughly understanding the problem and the way your customers think.

Total MRR

$0

Step 2: Soft launch to early adopters

What we did

Once we had our MVP built it was time to get some users. We went about this in two ways. First, being in the community, we had a bunch of friends that were great customer candidates. Second, we knew that Hacker News was the perfect place to get our initial customer base so a Show HN made complete sense. From the initial connections and users we picked up from the post, we were able to convert 20 users into $50/month paying customers.

Key takeaways

Take the time before you start your company to build personal connections in the industry you plan to create products. For us, this meant web infrastructure companies. Second, take the time beforehand to participate in your industry’s community. Scott is an avid participator on HN, allowing us to quickly get some attention on the front page.

Total MRR

$1,000

Step 3: Synthesize feedback, build more

What we did

Within a month of our soft launch, we were able to pick up 200 free trial signups. The inbound interest helped out in a couple ways. First, it was a telling sign we were building something people wanted. Second, it gave us a perfect pool of users to talk to and figure out what we should build over the next few months.

From these conversations we realized a few things:

Companies didn’t just want to post incident updates. They wanted a way to tangibly show performance metrics as a hands off customer support and marketing tool.

Companies wanted to use a status page for various types of communication, not just for external customers. As an example, Ryan, CTO of InternMatch, discussed tagging incidents as public or private for internal vs. external stakeholders. Interestingly, many companies signed up looking to use the page for internal purposes.

Enterprise companies wanted more control over the look and feel of the page. Branding is huge for them and every little detail matters.

Key takeaways

Get in touch with your users as quick as possible and figure out what you need to build. Segment your users based on the features they had asked for. From there, you’ll be able to follow up with the right people as you make progress. It’s an easy way to say, “Hey, you wanted this, here’s some proof that we are building it, stay excited.” Hand hold users through the sign up process. At this point, you shouldn’t be worrying about what’s scalable and what isn’t. Take the time to figure out where your user experience sucks and make the necessary changes. Ask for the sale.

Total MRR

$2,000

Step 4: Expand the funnel

What we did

Feeling that the product was worth the price tag, it was time to feed the user acquisition engine. Observing interest from small startups to enterprises from our initial launch, we made the decision to change pricing from free and $50/mo. to $19 – $249 per month along with an enterprise tier.

Using our initial traction as the main story for press, we officially ‘launched’ on Hacker News and TechCrunch. Now came the true test. These companies had never heard of us before and we made it a point to personally reach out to every signup. The point of these emails is to start the conversation as early as possible. Here’s an example. And another one. Our personal emails had a high hit rate of leading to calls where we could manually help get the users’ pages setup.

The official launch and personalized sales process led to an additional $1,500 in MRR.

Key takeaways

Do not underestimate the value of talking to your users on the phone (or better, in person). While not every startup will have an article written in TechCrunch, every startup will have opportunities to provide users with insanely great experiences.

Write a personal email to every single user that signs up. Use something like GoToMeeting and give access to the user so they can share their screen with you as you guide them through the setup process. Use Olark to reach out to users when they’re having problems. For the users that never respond to you, make sure to have a process in place to monitor their account activity. For us, a lead score is fed into our CRM daily. From there, we have a running list of qualified, unreached leads who are active and a list of qualified, unreached leads who are inactive. Along with a signup drip campaign, each of these segments receives personalized communication from us.

As an example, one of the easiest ways to create product evangelists is to fix bugs in real time without the user even telling you about the problem they experienced. “Hey John, just saw an error come through on our backend. Looks like our file uploader plugin was throwing 404’s and failing silently. Just fixed and should be good to go now.” You’d be amazed at how much just giving a shit makes others want you to succeed.

Let the larger customers who need bigger plans pay you more. Create an enterprise tier for potential custom work even if none is coming your way at the given moment.

Total MRR

$3,500

Step 5: The aha! experience

What we did

The idea of creating and maintaining a status page outside of your infrastructure is like a cold that won’t go away. You should probably see the doctor, but keep putting it off until suddenly you’re on your way to the ER coughing up a lung. Similarly, a status page is one of those things you should create before you experience downtime, but end up building at 4am in the morning when your hosting provider goes down. Understanding this pain point, we knew there was a huge opportunity to absolutely delight users with the first experience, eliminating the “I’ll get to it later excuse.”

Taking the time to manually onboard customers, we kept noticing the same pattern. A light bulb would go off immediately with the users that got through the signup wizard in under 5 minutes, added a metric, and viewed their page for the first time. We could literally feel the weight coming off their chest. It was the aha! moment.

Before building Public Metrics and optimizing our setup process, Statuspage mainly became valuable when a user had her first incident to report. Now, users immediately understand the value by setting up a page like the one below from Day 1.

Key takeaways

Flip the pain point on its head and find your aha moment as quickly as possible. You’ll see it come through on the faces of your users. You’ll see it in the email responses you receive. And best of all, you’ll see it from the money in your bank.